When it comes to blockchain, decentralization is not just a buzzword; it is the soul of the system. Since no central authority controls the network, decisions are made by consensus from developers, miners, validators, users, and investors. Sounds democratic, right?
Yes, indeed, it does. But what happens when that democracy breaks down? When the consensus community collapses into controversy? Well, I will be providing a detailed answer to this question. Follow closely till the end as I explain what happens when a blockchain community disagrees on an upgrade.
KEY TAKEAWAYS:
- Blockchain upgrades are more like software updates, which are often done to improve scalability, correct vulnerabilities, and introduce new features to a blockchain.
- The various actors involved in a blockchain’s decision-making include developers, miners, users, exchanges, and token holders.
- A fork happens when there is disagreement about how a decentralized network should work. The chain split into two separate blockchains, each with its own version of history.
- Real-world cases of blockchain upgrade disagreement include Bitcoin vs. Bitcoin Cash (2017) and Ethereum vs. Ethereum Classic (2016).
Are Blockchain Upgrades Even Necessary To Begin With?
Yes, they are. Blockchain upgrades are more like software updates but with far higher stakes. Similar to how your laptop’s OS can be updated, a blockchain upgrade is often done to improve scalability, correct vulnerabilities, and introduce new features. Core development teams or contributors usually propose upgrades. However, because there is no central authority, the changes must be approved or at least accepted by the majority of the community.
So, Who Gets To Decide?
In traditional organizations, decisions often follow a clear structure — executives, board members, and stakeholders. However, in a decentralized blockchain, governance through the community can sometimes be difficult to handle because there are various actors with different interests. Below is an overview of each of them:
- Developers who want to improve the protocol.
- Miners who want upgrades that protect their revenue.
- Users who are after ease, utility, and affordability.
- Exchanges that prioritize liquidity and customer demand.
- Token holders who are watching the market value.
As a result of these different players, decisions are made through informal processes like forum discussions, testnet deployments, improvement proposals, and adoption through node software. In cases where a disagreement remains around major changes, a consensus becomes almost impossible. This is when forks happen.
What Is A Fork?
A fork happens when a blockchain’s underlying code is changed. You can think of a fork like when you’re driving; the road splits in two, and you must choose which path to follow. In blockchain, nodes must decide whether to adopt the new rules or continue with the old ones. If everyone agrees, the upgrade goes smoothly. But if there’s disagreement, the chain can split into two separate blockchains, each with its own version of history.
Forks are generally classified into soft forks and hard forks. A soft fork is a backward-compatible upgrade. This means the new rules are stricter than the old rules, but nodes that have not updated their software can still recognize and accept blocks produced by upgraded nodes. Although they may not fully understand them.
A hard fork is a non-backward-compatible upgrade. This means the new rules are so different from the old ones that upgraded and non-upgraded nodes can no longer recognize each other’s blocks. When communities disagree on a hard fork, the chain can split into two entirely different blockchains with different currencies, rules, and communities.
Read Also – What Happens When a Blockchain Forks?
Real-World Case Studies of Blockchain Disagreements
The conversation around blockchain disagreements is not theoretical; it has happened many times. Here is a highlight of the two most popular ones:
Bitcoin vs. Bitcoin Cash (2017)
The bone of contention for this split was block size. Some people in the Bitcoin community argued for increasing the block size to allow faster and cheaper transactions. Others wanted to keep the blocks small to preserve decentralization and security. This caused Bitcoin to split into:
- Bitcoin: Kept the smaller 1MB block size.
- Bitcoin Cash: Increased the block size to 8MB for faster transaction throughput.
While both chains still exist, Bitcoin remains far more dominant in value and community size.
Ethereum vs. Ethereum Classic (2016)
This split was triggered by The DAO hack, where an attacker exploited a vulnerability in a smart contract and stole millions of dollars worth of Ether. To restore funds, Ethereum developers proposed a hard fork that would reverse the attack by editing the blockchain history. Some community members believed this move was controversial because it violated the principle of a blockchain’s immutability. This lead to two chains:
- Ethereum: Which implemented the fork and reversed the attack.
- Ethereum Classic: Which continued the original chain with the stolen funds intact.
Conclusion
The blockchain community is made up of many stakeholders, who are human beings. And as long as humans are involved, disagreements are a certainty. In fact, it might sound counter-intuitive, but disagreement can be a sign of a healthy, vibrant ecosystem. Nonetheless, it is good for a blockchain to have transparent communication with community members to ensure the project thrives in the long term.
References
- coinmarketcap.com – Understanding Blockchain Upgrades: Hard Fork vs. Soft Fork
- academy.yellowcard.io – Hard Fork vs Soft Fork
- dxtalks.com – Understanding Hard Forks In Blockchain: A Comprehensive Guide to Blockchain’s Evolution
